NEW YORK (CNNfn) - Internet stocks were rocked on Monday in heavy-volume, post-Christmas trading.
Although they recovered some of the sharp losses posted early on in the session, the dot-coms, which have been the market’s darlings recently, ended the day broadly lower.
The Dow Jones composite Internet index ended down 1.64 percent, closing 6.6 lower at 396.98, after reaching a low of 382.79 in mid-afternoon activity.
Meanwhile, the tech-rich Nasdaq composite index, which peaked at 4001.9 and bottomed out at 3902.35, posted another record finish, closing 5.94 higher at 3975.38. More than 1.1 billion shares changed hands during the session.
Internet stocks over the past several weeks had accelerated their run-up, which market observers attributed in part to "window dressing,” as fund managers scrambled to lock in on the high-flying sector before year-end in order to impress investors.
But now, with only four trading sessions remaining in 1999, most of that buying appears to be finished, said Scott Bleier, chief investment strategist at Prime Charter Ltd. in New York.
"The year-end, need-to-own representation of these stocks is probably done, and that has become a very big problem,” Bleier told CNNfn.com. "Whoever has to own them, now owns them, in terms of institutions.”
Bleier said he expects the downward trend in the dot-coms to continue through the rest of the week, to the benefit of some other market segments, which had fallen out of favor.
"People are selling these stocks on a momentum basis and buying other quality names that have lagged like financial stocks, transportation stocks, utility stocks, and to a lesser degree, drug stocks,” he said. "I think we’re seeing the beginning of a short-term trend in that direction.”
Online retailers socked
Internet retailers were among the hardest hit in Monday’s activity. Shares of eToys (ETYS) slid more than 16 percent, ending the session 5 lower at 25-15/16. Amazon.com (AMZN) fell nearly 10 percent, shedding 8-7/8 to end at 81-1/8.
Shares on Barnesandnoble.com (BNBN) slipped 4.75 percent, ending the session ¾ lower at 15. Cyberian Outpost (COOL), an Internet retailer of computer hardware, software and accessories, fell 4.6 percent, finishing 15/32 lower at 9-19/32.
Priceline (PCLN), the Web site where people name their own price for items including airline tickets and groceries, slid 5/8 to 54-3/8. The company on Monday announced plans to expand its business by launching "Perfect YardSale,” a service aimed at competing with online auctioneers.
Web portal Yahoo! (YHOO) bucked Monday’s downward trend, making a comeback in late afternoon activity after sliding more than 5 percent earlier in the day. Shares of Yahoo! ended the session up 12-3/8 at 415, a 3 percent rise on the day. The company announced on Monday that orders on its shopping site this holiday season were nearly five times the level recorded last year.
Chips on the ups
Chip makers, for the most part, ended Monday’s session higher, sending the Philadelphia Stock Exchange’s Semiconductor index up 8.11 to 704.07, a 1.17 percent rise on the day.
Shares of industry bellwether Intel (INTC) ended 1-15/16 higher at 85-1/16, a 2.3 percent increase. Meanwhile, Intel rival Advanced Micro Devices (AMD) ticked up 1/8 to close at 28-3/4.
Memory-chip maker Micron Technology (MU) added 4.5 percent, ticking up 3-3/8 to end the session at 78. Shares of Xilinx (XLNX), which specializes in programmable logic chips, finished 5 percent higher, adding 4-1/2 to close at 93-3/4.
Monday’s semiconductor losers included Motorola (MOT), down 3-7/16 at 141-3/8; National Semiconductor (NSM), down 1-1/4 at 43-3/4; and Analog Devices (ADI), off ¾ at 80-5/8.
Equipment makers mixed
Computer-equipment makers posted mixed results Monday. The Nasdaq computer index slipped 39.86 to 2247.53, a 1.74 percent decline on the day.
Shares of Dell (DELL), which were the most actively traded on the Nasdaq with more than 22 million shares changing hands, ended 3/8 lower at 52-5/16. Hewlett-Packard (HWP), which trades on the New York Stock Exchange, slid 3.6 percent, finishing 4-1/8 lower at 108-1/2. Apple Computer (AAPL) slid 4 percent, finishing 4-3/16 lower at 99-5/16.
Compaq (CPQ) edged up nearly 4 percent, adding 1-1/8 to 27-5/8. IBM (IBM) ticked up 1-1/8 to finish 1 percent higher at 109-3/4. Shares of Cisco Systems (CSCO) inched up ¾ to close at 105-3/16. Sun Microsystems (SUNW) added ¼ to 76.
A February correction?
Looking beyond the volatility that many market watchers expect to see among technology stocks for the remainder of this week, Ulric Weil, technology analyst at Friedman Ramsey & Co., said he expects to see some bumps in the road in 2000.
Weil is one of a growing number of market analysts who are pegging the Federal Reserve policy-making committee’s February meeting as the potential turning point for the valuations in the tech sector, especially Internet stocks.
"I feel comfortable into January prior to the Federal Open Market Committee meeting,” Weil said. "Then we’ll have a correction, very likely, as we’ve had before, and we’ll have maybe one or two corrections thereafter, in the spring, in the summer and in the fall, just like we did this year and last year.”
"But the good stocks always come back,” Weil added. "By that I mean the good Internet stocks, the quality stocks. They will go down in the corrections, but they will come back. The second- and third-tier Internet stocks that have no proven management teams, no clearly defined market niche, no business model that can stand scrutiny, they may not come back in the market we’re going to have in 2000.” 
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